Exhibit 5-9 Refer to Exhibit 5-9.The price ceiling shown in panel (a)
A) is not binding.
B) creates a surplus.
C) creates a shortage.
D) Both (a) and (b) are correct.

Question

Exhibit 5-9  Refer to Exhibit 5-9.The price ceiling shown in panel (a)
A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both (a) and (b) are correct.

Quizplus · Accepted Answer

The equilibrium price in panel (a) is below the price ceiling, therefore the price ceiling is not binding and has no effect on the market outcome. There is neither a shortage nor a surplus.